Glencore in debt for equity swap with Russneft
Mining firm Glencore is finalising a purchase of a 49 per cent stake in Russian oil refinery firm Russneft.
The companies are preparing a deal to convert $900m (£604m) of debt into equity, which will see Glencore take on a 49 per cent holding in the producing side of the Russian firm.
Glencore, which is led by Ivan Glasenberg, first revealed that the debt-for-equity swap would take place in March last year, when it also disclosed that Russneft had repaid $1.2bn of its debt.
Glencore has been a partner to Russneft since the firm was founded in 2002. The debt-for-equity agreement was confirmed by Russneft’s owner, Mikhail Gutseriyev, on Russian TV yesterday.
He said: “All the subsidiaries will be folded into the main company. The deal is being signed, we have been finishing the shareholders agreement. Glencore will own 49 per cent in Russneft.”
Gutseriyev, the sole shareholder at the holding company level after a corporate restructuring, said the deal was awaiting approval from Russian competition regulators.
Last month, he took over as chairman of the board after stepping down as the firm’s president.
Switzerland-based Glencore recently reported a two per cent decline in profit during 2014, with earnings in its trading division up to $3bn, while mining earnings fell by seven per cent to $9.8bn.
Shares in Glencore fell 0.61 per cent to 285.65p yesterday.